The first wave of cash payments to 4.2 million borrowers possibly harmed during the foreclosure crisis have been mailed out, but the process has already hit a hurdle, U.S. bank regulators said.

Making an already complicated matter worse, an unknown number of checks issued bounced when recipients tried to cash or deposit them.

So far, more than a million checks totaling $1.2 billion have been cut to people who were in the foreclosure process in 2009 or 2010, when banks were routinely approving foreclosure paperwork without proper review. Those actions came to be known as robo-signing.

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The compensation, a grand total of $3.6 billion, is part of a deal between banks and federal regulators that settle allegations that mortgage servicers abused the foreclosure system. Servicers are the companies that manage and receive home-loan payments.

Payments, which range from $300 to $125,000, were mailed out on April 12. Most of the payments are expected to be sent out by month's end. This applies to borrowers whose loans were serviced by: Aurora, Bank of America, Citibank, HSBC, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank and Wells Fargo. The last phase of payments from those 11 companies and their affiliates are expected to be sent out by mid-July.

The mail-out dates for payments to borrowers with loans serviced by Goldman Sachs and Morgan Stanley have yet to be announced.

So far, roughly 342,000 checks totaling $322 million have been cashed or deposited, said the Federal Reserve, one of two U.S. agencies involved in the settlement. The other agency is the Office of the Comptroller of the Currency.

An unknown number of checks bounced when borrowers tried to cash or deposit them, reported the Federal Reserve. The company contracted to send out payments, Rust Consulting, and the paying bank, Huntington National Bank, have fixed the problem, the agency said this week.

This is not the first time the foreclosure settlement has encountered issues.

The mass settlement actually replaced an expensive and drawn-out process that allowed borrowers to request free foreclosure reviews. That process encountered several problems including lack of participation and substantial results.

Borrowers did not have to fill out paperwork to receive the cash payments being mailed out.

Point Loma resident Chris Clifton, who was in the foreclosure process with an Oregon home, is among the 4.2 million borrowers who may be due compensation. The 48-year-old trade-show worker said whatever he gets in the mail will never make up for everything he's endured since 2008.

Clifton's adjustable-rate mortgage caused his monthly mortgage payment to balloon from $900 to as high as $2,000, he said. He requested a loan workout but was denied one by his mortgage company because the house was no longer considered his primary residence. Clifton said he had to move from Oregon to San Diego in order to find employment.